UAE- 1MDB defaults on financial obligations says Ipic

4/18/2016 11:49:40 PM

(MENAFN- Khaleej Times) Abu Dhabi-owned International Petroleum Investment Company or Ipic has said that 1 Malaysia Development Berhad or 1MBD a state-owned Malaysian fund was in default of its financial obligations amounting to $1.1 billion in debt and interest.

In a regulatory filing to the London Stock Exchange on Monday the Abu Dhabi-based sovereign wealth fund said "it has performed all of its obligations under the binding term sheet" which was agreed upon last year.

Ipic further said that it was terminating last June's agreement under which it agreed to provide $1 billion in cash as well as assume payments on $3.5 billion of 1MDB debt.

It also forgave an undisclosed amount of debt that 1MDB owed to Ipic in exchange for assets which have not been named.

1MDB in response said that Abu Dhabi had agreed to assume its interest payments on a $1.75 billion bond but one such payment due on Monday had not been paid because of the dispute between the two.

"1MDB wishes to make clear that it and its group entities will meet all of their other obligations under any other financing arrangements and have ample liquidity to do so" it said in a statement. The Malaysian fund did not specify whether it would make the interest payment that was due on Monday.

In an earlier statement the 1MDB fund said it has repaid all of its bank debt and short-term obligations and has a cash surplus of $585.2 million.

Over the past four weeks 1MDB has made debt principal repayments of approximately 7.25 billion ringgit it said.

1MDB and MOF have failed to perform certain payment and other obligations owed by them to the Ipic group including the obligation to pay $1.102725 billion plus interest accruing the Ipic statement says.

As a result "it said 1MDB and MOF are in default pursuant to the terms of the binding term sheet and Ipic and Aabar's obligations under the binding term sheet have terminated."

Following such default Ipic and Aabar have engaged with and extended opportunities to both 1MDB and MOF to remedy their defaults without success.

"Ipic and Aabar have now reserved all of their rights and are considering their options in relation to this dispute including referring the matter to the appropriate dispute resolution forum" the statement said.

IPIC and its subsidiary Aabar Investments both incorporated in the Abu Dhabi refer to recent media reports concerning the activities of 1MBD. On April 11 Ipic and Aabar Investments in a statement to LSE denied the ownership of Aabar BVI a company incorporated in the British Virgin Islands which was wound up and dissolved in June 2015.

"Both Ipic and Aabar confirm that neither has received any payments from Aabar BVI nor has IPIC or Aabar assumed any liabilities on behalf of Aabar BVI" the statement said.

Malaysian Prime Minister Najib Razak was behind the creation of 1MDB in 2009 and has been fighting allegations that cash from the fund flowed into his personal accounts according to media reports.

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